PA Chamber Minute

Proposed State Budget
February 26, 2010

Hi, I’m Gene Barr, vice president of the Pennsylvania Chamber. Welcome to this month’s Pennsylvania Chamber Minute.

In his February budget address, Governor Ed Rendell noted the challenges facing the Commonwealth – including an anticipated revenue shortfall of $525 million; the eventual loss of federal stimulus dollars; and the looming public pension crisis.

The governor also acknowledged that job creation remains sluggish and that more needs to be done to bring jobs to Pennsylvania and create a more prosperous economic future.

Unfortunately, taken as a whole, the governor’s proposed budget for the 2010-2011 fiscal year would not improve Pennsylvania’s prospects for private-sector job creation. Nor would it do enough to lighten the burden on taxpayers, or reduce government spending. The budget would actually increase spending by 4 percent over the current fiscal year.

To help deal with the pension crisis, the governor proposes the creation of a special reserve fund that would rely on revenue from new taxes on natural gas extracted from the Marcellus shale, cigars and smokeless tobacco; and from the repeal of 74 existing sales tax exemptions, including those for business services. Even though this expansion of the sales tax base would coincide with a reduced rate, it is still a tax increase on business, one that would be particularly detrimental to small business.

Governor Rendell does propose to lower the uncompetitive Corporate Net Income tax rate to 8.99 percent, eliminate the cap on net operating losses and adopt a single sales apportionment formula for the Corporate Net Income tax. However, he wants these improvements tied to the adoption of combined reporting, a complex tax reporting system that creates winners and losers within the tax system.

While the business community more than welcomes positive progress on business tax reform, doing so in conjunction with combined reporting would do little to improve the state's overall business climate or make it conducive to job growth.


	PA Chamber Minute
The Pennsylvania Chamber Website PACHAMBER.ORG Citizens to Protect PA Jobs PROTECTPAJOBS.COM PA Chamber Minute Website PACHAMBERMINUTE.COM Archive	Text Archive Proposed State Budget February 26, 2010 Hi, I’m Gene Barr, vice president of the Pennsylvania Chamber. Welcome to this month’s Pennsylvania Chamber Minute. In his February budget address, Governor Ed Rendell noted the challenges facing the Commonwealth – including an anticipated revenue shortfall of $525 million; the eventual loss of federal stimulus dollars; and the looming public pension crisis. The governor also acknowledged that job creation remains sluggish and that more needs to be done to bring jobs to Pennsylvania and create a more prosperous economic future. Unfortunately, taken as a whole, the governor’s proposed budget for the 2010-2011 fiscal year would not improve Pennsylvania’s prospects for private-sector job creation. Nor would it do enough to lighten the burden on taxpayers, or reduce government spending. The budget would actually increase spending by 4 percent over the current fiscal year. To help deal with the pension crisis, the governor proposes the creation of a special reserve fund that would rely on revenue from new taxes on natural gas extracted from the Marcellus shale, cigars and smokeless tobacco; and from the repeal of 74 existing sales tax exemptions, including those for business services. Even though this expansion of the sales tax base would coincide with a reduced rate, it is still a tax increase on business, one that would be particularly detrimental to small business. Governor Rendell does propose to lower the uncompetitive Corporate Net Income tax rate to 8.99 percent, eliminate the cap on net operating losses and adopt a single sales apportionment formula for the Corporate Net Income tax. However, he wants these improvements tied to the adoption of combined reporting, a complex tax reporting system that creates winners and losers within the tax system. While the business community more than welcomes positive progress on business tax reform, doing so in conjunction with combined reporting would do little to improve the state's overall business climate or make it conducive to job growth.
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